- The following summary of receipts and payments was extracted from the records of the Ministry of Finance for the fiscal year ended 30 June 2010.(Solved)
The following summary of receipts and payments was extracted from the records of the Ministry of Finance for the fiscal year ended 30 June 2010.
Required:
The statement of comparison of budget and actual amounts for the fiscal year ended 30 June 2010 in accordance with International Public Sector Accounting Standard (IPSAS) 24 (Presentation of Budget Information in Financial Statements
Date posted: February 15, 2019.
- i. A certain government agency has a widely published environmental policy in which it undertakes to clean up all contamination arising from its operations. The...(Solved)
i. A certain government agency has a widely published environmental policy in which it undertakes to clean up all contamination arising from its operations. The government agency has a record of honoring agency operates. During the course of a naval exercise, a vessel was damaged and a substantial amount of oil leaked. The government agency agreed to pay for the costs of the immediate clean-up and the costs of monitoring and assisting marine animals and birds.
Required:
In the context of International Public Sector Accounting Standard Number 19 (Provisions, Contingent Liabilities, and Contingent Assets}, evaluate how the costs in the above, scenario would be accounted for.
ii. Mashinani City Council constructed a 20 storey office building for use by the council at a cost of Sh.800 million. This building came into use on 1 January 1996 and it was expected to have a useful life of 40 years. During the year 2010, National Safety Regulations required that owing to security concerns, the top 4 storeys of high-rise buildings should be left unoccupied for the foreseeable future. These regulations were to come into force on 31 December 2010. As at 31 December 2010, the building had a fair value less costs to sell of Sh.450 million. As at the same date, the replacement cost of a similar 20 storey building was Sh.850 million.
Required:
Using the service units approach, evaluate whether there is any impairment loss as at 31 December 2010 in accordance with the requirements of International Public Sector Accounting Standard Number 21 (Impairment of Non-Cash-Generating Assets).
Date posted: February 15, 2019.
- In relation to-International Public Sector Accounting Standards (IPSASs).
i) Explain any three benefits that would accrue to a government as a result of the adoption of...(Solved)
In relation to-International Public Sector Accounting Standards (IPSASs).
i) Explain any three benefits that would accrue to a government as a result of the adoption of IPSASs.
ii) Analyze, any two limitations that, state (or. county) governments in your country are likely to face in implementing IPSASs.
Date posted: February 15, 2019.
- In the context of IPSAS 19 (Provisions, Contingent Liabilities and Contingent Assets), explain the meaning of the term 'constructive obligation'.(Solved)
In the context of IPSAS 19 (Provisions, Contingent Liabilities and Contingent Assets), explain the meaning of the term 'constructive obligation'.
Date posted: February 15, 2019.
- With reference to IPSAS 9 (Revenue from Exchange Transactions):
(i) Evaluate the objectives of the standard.
(ii) Analyse the difference between 'exchange transactions' and 'non-exchange transactions'.(Solved)
With reference to IPSAS 9 (Revenue from Exchange Transactions):
(i) Evaluate the objectives of the standard.
(ii) Analyse the difference between 'exchange transactions' and 'non-exchange transactions'.
Date posted: February 15, 2019.
- In the context of IPSAS 23 (Revenue from Non-exchange Transactions), summarize five sources of revenue from non-exchange transactions recognized by this standard.
(Solved)
In the context of IPSAS 23 (Revenue from Non-exchange Transactions), summarize five sources of revenue from non-exchange transactions recognized by this standard.
Date posted: February 15, 2019.
- On 1 January 2008, Mashambani County Education Department purchased a printing machine at a cost of Sh.40 million. The department estimated that the useful life...(Solved)
On 1 January 2008, Mashambani County Education Department purchased a printing machine at a cost of Sh.40 million. The department estimated that the useful life of the machine would be ten years. On 31 December 2012, it was reported that an automated feature on the machine's function did not operate as expected, resulting in a 25% reduction in the machine's annual output over the remaining five years of its useful life. The cost of a new printing machine was Sh.45 million as at 3 1 December 2012.
Required:
The impairment loss as at 31 December 2012 using the service units approach
Date posted: February 15, 2019.
-
With reference to IPSAS 26 (Impairment of Cash Generating Assets), explain the meaning of the following terms
i) Value in use.
ii) Recoverable amount.(Solved)
With reference to IPSAS 26 (Impairment of Cash Generating Assets), explain the meaning of the following terms
i) Value in use.
ii) Recoverable amount.
Date posted: February 15, 2019.
- In 1993, the Nairobi County Government constructed a public primary school at a cost of Sh.25 million. It was estimated that the school would be...(Solved)
In 1993, the Nairobi County Government constructed a public primary school at a cost of Sh.25 million. It was estimated that the school would be used for 40 years. By the end of 2013, the school population had declined from 1,500 students to 400 students as a result of a population shift caused by the bankruptcy of a major employer in the area. The management decided to close the two top floors of the three storey school building. The management has no expectation that enrollment will increase in future such that the upper storeys would be reopened. The current replacement cost of the school is estimated at Sh.13 million.Required:
Calculate the impairment loss to be recognized using the depreciated replacement cost approach.
(b) International Public Sector Accounting Standard (IPSAS) 22 (Disclosure of Financial Information about the General Government Sector (GGS)), defines a general government sector as "comprising all organizational entities of the general government as defined in statistical bases of financial reporting".
With regard to this standard, outline eight items that should be disclosed in respect of a GGS.
(c) IPSAS 20 (Related Party Disclosures) defines a related party as 'any party that has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions or if the related party entity and another entity are subject to common control'.
With respect to the above statement:
i) Explain the meaning of 'significant influence'.
ii) Outline four ways in which significant influence might be exercised.
Date posted: February 15, 2019.
- With reference to IPSAS 9 (Revenue from Exchange Transactions), summarize five conditions that must be satisfied before revenue from the sale of goods can be...(Solved)
With reference to IPSAS 9 (Revenue from Exchange Transactions), summarize five conditions that must be satisfied before revenue from the sale of goods can be recognized.
Date posted: February 15, 2019.
- In the context of IPSAS 4 (The Effects of Changes in Foreign Exchange Rates), explain how exchange differences arising on monetary items are recognized.(Solved)
In the context of IPSAS 4 (The Effects of Changes in Foreign Exchange Rates), explain how exchange differences arising on monetary items are recognized.
Date posted: February 15, 2019.
- i) On 1 January 2009, the government purchased a software licence for Sh.350,000 for an application on its new main frame computer. The government estimated...(Solved)
i) On 1 January 2009, the government purchased a software licence for Sh.350,000 for an application on its new main frame computer. The government estimated that the useful life of the software would be eight years and that it would receive benefits and service potential from the software on a straight-line basis over the useful life of the software. As at 31 December 2013, usage of the application had declined to 15% of its originally anticipated demand. A licence for a software application to replace the remaining service potential of the existing software application would cost Sh. 150,000.
Required:
Impairment loss to be recognized for the software using the depreciated replacement cost approach.
ii) On 1 January 2004, the government built an office at a cost of Sh.50 million. The building was expected to provide service for 40 years. On 31 December 2013, after 10 years of use a fire caused severe structural damage and due to safety reasons, the office building was closed for repairs that cost Sh.35.5 million. These repairs were made to restore the office building to occupiable condition. The current cost' of a new office building is Sh,100 million.
Required:
Impairment loss to be recognized for the office building using the cost restoration approach
Date posted: February 15, 2019.
- With reference to IPSAS 26 (Impairment of Non-Cash Generating Assets):
i) Explain the meaning of ‘cash-generating assets’.
ii) Analyse the criteria that could be used to identify...(Solved)
With reference to IPSAS 26 (Impairment of Non-Cash Generating Assets):
i) Explain the meaning of ‘cash-generating assets’.
ii) Analyse the criteria that could be used to identify ah asset that might be impaired.
Date posted: February 15, 2019.
- In the context of unethical management practices, discuss four incentives that could motivate the management of a business entity to manipulate the entity's financial statements...(Solved)
In the context of unethical management practices, discuss four incentives that could motivate the management of a business entity to manipulate the entity's financial statements as well as the underlying supporting records.
Date posted: February 14, 2019.
- The following financial statements relate to Hamada Group:(Solved)
The following financial statements relate to Hamada Group:
Date posted: February 14, 2019.
- Pamoja group has-prepared the following draft statements of financial position as at 30 June:(Solved)
Pamoja group has-prepared the following draft statements of financial position as at 30 June:
Date posted: February 14, 2019.
- The following financial statements relate to the Techno Group for the year ended 31 October 2012:(Solved)
The following financial statements relate to the Techno Group for the year ended 31 October 2012:
Date posted: February 14, 2019.
- The following trial balance relates to Ndovu Limited as at 31 March 2013:(Solved)
The following trial balance relates to Ndovu Limited as at 31 March 2013:
Additional information:
1. The value of land in the trial balance is given as Sh.300 million. The buildings were revalued on 31 March 2013 at Sh.920 million. The estimated useful life of buildings was 20 years as at 1 April 2012. Depreciation on buildings is charged at 60% to cost of sales and 20% each to distribution costs and administrative expenses.
2. The company constructed its own plant at a total cost of Sh.240 million. The plant was brought into use on 1 October 2012 but its cost had not been capitalized. Instead, its cost had been included in the cost of sales. Plant is depreciated at 12.5% per annum using the reducing balance method (time apportioned) and charged to the cost of sales.
3. The fair value of the investments held at fair value was Sh.271 million as at 3 1 March 2013.
4. The balance of tax on the trial balance represents an overprovision of previous years" tax.
The estimate of tax for the current year is Sh.187 million. At 31 March 2013, there were Sh.400 million of taxable temporary differences. For deferred, tax assume an average tax rate of 30%.
5. The 2% loan note was issued on 1 October 2012 under the terms that require a large premium on repayment. The effective interest rate therefore is 6% per annum.
6. The suspense account relates to a rights issue of shares that was made on 1 January 2013. The terms of the issue were one share for every four held at Sh.8 per share. The par value of each share is Sh.5. The issue was fully subscribed.
Required:
Prepare the following statements in a format suitable for publication:
a) Statement of comprehensive income for the year ended 31 March 2013.
b) Statement of financial position as at 31 March 2013.
Date posted: February 14, 2019.
- The Kengo group has prepared the following financial statements for the years ended 31st March 2013 and 2012:(Solved)
The Kengo group has prepared the following financial statements for the years ended 31st March 2013 and 2012:
Date posted: February 14, 2019.
- The following trial balance relates to Mapema Limited, a quoted company, as at 30 April 2013:(Solved)
The following trial balance relates to Mapema Limited, a quoted company, as at 30 April 2013:
Required:
Prepare for publication purposes:
a) A statement of comprehensive income for the year ended 30 April 2013.
b) A statement of changes in equity for the year ended 30 April 2013.
c) A statement of financial position as at 30 April 2013.
Date posted: February 14, 2019.
- The following financial statements relate to the Crest group for the year ended 31 March 2013:(Solved)
The following financial statements relate to the Crest group for the year ended 31 March 2013:
Date posted: February 14, 2019.
- The following are the group income statement and group statement or financial position of Soma group of companies, for the financial year ended 31 October...(Solved)
The following are the group income statement and group statement or financial position of Soma group of companies, for the financial year ended 31 October 2013:
Date posted: February 14, 2019.
- Zeddy Limited is a company quoted at the securities exchange. The following trial balance was extracted from the books of the company as at 31...(Solved)
Zeddy Limited is a company quoted at the securities exchange. The following trial balance was extracted from the books of the company as at 31 October 2014:
Date posted: February 14, 2019.
- Afya pensioners is a funded, non-contributory defined benefit scheme that was established by the management of Afya Food processors Limited in 1950. The directors have...(Solved)
Afya pensioners is a funded, non-contributory defined benefit scheme that was established by the management of Afya Food processors Limited in 1950. The directors have always expensed the company’s contribution to the scheme in the period of contribution and also credited to the income statement of any period, any refunds made from the scheme during the period in question.
As a result of the above policy, material variations in costs and incomes of Afya Food Processors Limited have arisen in the past years. These worsened by any contribution holidays or redundancies of employees. In this year’s audit, the auditors. Ujuzi and Associates described the company’s pension accounting policy as “inadequate” as the resulting accounts do not give a true and fair view of pension costs to the employer. The auditors have also pointed out that current policy can be used to manipulate the company’s profit levels.
The auditors have suggested that either of two approaches (the accrued benefits or prospective benefits) be adopted the management in accounting for pension costs.
Required:
i) Do you agree with the auditors positions? Why?
ii) State and explain three reasons why there may be variations in the regular pension costs to the employer.
iii) Briefly explain the two accounting approaches suggested by the auditor. What is their effect on the pension fund?
iv) What would be the main objective of adopting an accounting standard, with respect to pension costs, for organization like Afya Food Processors Limited?
Date posted: February 14, 2019.
- Explain the meaning of the following terms as used in pension accounts
(i) Funded schemes.
(ii) Experience adjustments.(Solved)
Explain the meaning of the following terms as used in pension accounts
(i) Funded schemes.
(ii) Experience adjustments.
Date posted: February 14, 2019.
- The following relates to Waastaafu Retirement Benefits Scheme, a defined benefit plan, for the years ended 31 December 2005, 2006, and 2007:(Solved)
The following relates to Waastaafu Retirement Benefits Scheme, a defined benefit plan, for the years ended 31 December 2005, 2006, and 2007:
Additional information:
1. As at 1 January 2005, the present value of plan obligations and fair value of plan assets were both sh. 1000 million.
2. Net cumulative unrecognized actuarial gains as at 1 January 2005 were sh. 140 million.
3. Assume all transactions occurred at the year end.
Required:
i) Actuarial gains or losses on the present value of plan obligations.
ii) Actuarial gains or losses on fair value of plan assets.
iii) Net pension cost to be charged in the income statement.
iv) Scheme balances to be reflected in the balance sheet
Date posted: February 14, 2019.
- Zedkey Ltd. operates a defined benefit pension plan The following financial data relates to the scheme for the past three years ended 30 April 2012:(Solved)
Zedkey Ltd. operates a defined benefit pension plan The following financial data relates to the scheme for the past three years ended 30 April 2012:
Date posted: February 14, 2019.
- In the context of IAS 19 (Employee Benefits), evaluate:
(i) When an amount should be recognized as a defined benefit liability.
(ii) The treatment of actuarial gains...(Solved)
In the context of IAS 19 (Employee Benefits), evaluate:
(i) When an amount should be recognized as a defined benefit liability.
(ii) The treatment of actuarial gains or losses.
(iii) The items that should be recognized in the income statement.
Date posted: February 14, 2019.
- Red line Limited in (b) above decided to grant its 800 employees 200 options each from 1 November 2010 which are conditional upon one still...(Solved)
Red line Limited in (b) above decided to grant its 800 employees 200 options each from 1 November 2010 which are conditional upon one still being in employment by 31 October 2013.
Date posted: February 14, 2019.
- i) In the context of IFRS 2 (Share Based Payments), explain three types of share-
based payments.
ii) Zawadi Ltd. grants to each of its 400 employees...(Solved)
i) In the context of IFRS 2 (Share Based Payments), explain three types of share-based payments.
ii) Zawadi Ltd. grants to each of its 400 employees 10,000 options to purchase shares in the company on condition that they remain in Zawadi Ltd/s employment for the next four years. Each option has been valued at Sh.15. Zawadi Ltd. predicts that 5% of its employees will leave the Company in each of the next four years and will thus lose their option rights.
Required:
Show how Zawadi Ltd. should reflect this arrangement for each of the next four years in the statement of comprehensive income and in the statement of financial position.
Date posted: February 14, 2019.